Alimony and the New Tax Law
Recent changes in the nation's tax laws have significantly changed how alimony will be reported on an individual's tax return. For years, alimony payments received from a former spouse were considered taxable income to the recipient, while the former spouse who made the payment received a deduction for what they paid.
The new changes brought about by the Tax Cuts and Jobs Act (TCJA) flips the tax benefits of alimony completely around. Beginning with divorces executed under a court order after Dec. 31, 2018 , alimony is no longer taxable to the recipient, while the payer of the alimony no longer gets the tax deduction.
Divorces already in effect still play by the old rules. But for new divorce decrees executed after December 31, 2018, these new changes will take effect. Existing divorce agreements can be legally modified after December 31st to follow these new rules, but only if the modification specifically addresses these changes.
Thank you for doing business with us.
101 W. 5th Street
Jamestown, NY 14701